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Consumer Trends in Virtual Goods and Downloadable Games in North America and Europe
DFC Intelligence, March 2010
In recent years, the game market in Asia has exploded driven by online games and virtual goods Now these trends are rapidly coming to the rest of the world. This new report, based on surveying current consumer attitudes and seven years of actual transaction data provides the most comprehensive look to date at how digital distribution models are being adopted by core gamers.
To understand how the movement to digital downloads and virtual goods are impacting the core game consumer, DFC Intelligence conducted a survey of nearly 5,000 gamers and partnered with Live Gamer to analyze seven years of virtual good transaction data from games released in Korea, U.S. Germany, Japan, the Philippines and Vietnam.
The result of this research is being presented in a detailed report which also includes access to Excel spreadsheets with survey data.
Part One Demographics and Methodology
- Source: The report is based on two major sources of primary research: 1) a survey of core consumers and 2) analysis of actual virtual goods transaction data from Live Gamer
- Survey Date: February 2010
- Consumers Surveyed: 4,816 in North America, U.K. and Europe
- Target Demographic: Gamers between the age of 13-24, primarily male
- User Base: Drawn from 15 million+ Xfire users
- Transaction Data: Analysis of Liver Gamer transaction data by country (Korea, U.S. Germany, Japan, the Philippines and Vietnam) and game from 2002-2009
Part Two Games Owned and Bought: Physical Goods
- Games owned, spending and units bought (overall and broken down by country)
Part Three Purchasing Digital Content
- How many have purchased (overall and broken down by country)
- What type of content purchased (overall and broken down by country)
- Analysis: Attitude questions on Downloadable Content (overall and broken down by country)
- Services used to Buy Digital Content (overall and broken down by country)
Part Four Hardware Systems Owned
- Systems owned (overall and broken down by country)
- DLC content purchase by platform overall for major platforms (Xbox 360, PS3, PC, Wii, iPod, mobile phone)
Part Five iPhone/iPod Touch
- Ownership by country
- Applications purchased (overall)
- Spending on games (overall and broken down by country)
Part Six Subscription games
- Total paying a monthly subscription (overall and broken down by country)
- Number of games currently subscribed to (overall and broken down by country)
- Amount spent (overall and broken down by country)
- Actual games subscribed to (overall)
Part Seven In-Game Goods
- Purchase of in-game goods (overall and broken down by country)
- Types of in-game goods purchased (overall and broken down by country)
- Reasons for buying in-game goods (overall and broken down by country)
- Amount spent on in-game goods (overall and broken down by country)
- F2P games used (overall)
- Frequency of F2P play (overall and broken down by country)
Part Eight Trading Goods
- Purchasing goods from another player (overall and broken down by country)
- Selling Goods to another player (overall and broken down by country)
- Opinions on trading goods (overall and broken down by country)
Part Nine Transactional Analysis and Forecasts
Data analysis of Live Gamer data by country
- Average per transaction of all games combined by country
- High game average per transaction by country (for games with 2+ year track record)
- Hypothetical models for future product
DFC Intelligence and Live Gamer Announce Broad Study On State of Virtual Goods Adoption Among Consumers
Results Indicate Core Gamers in North America and Europe are Flocking to Virtual Items
Research firm DFC Intelligence and Live Gamer, the global leader of total commerce solutions for online game publishers, social networks and digital entertainment companies, today announced a new report indicating that gamers in Europe and North America are now largely comfortable with buying digital content. According to the report, titled “Consumer Trends in Virtual Goods and Downloadable Gaming in North America and Europe,” gamers are rapidly adopting the virtual item model where they purchase individual digital components such as virtual currency, items or characters.
The survey was conducted in January and February 2010 among nearly 5,000 gamers in North America and Europe. In addition, DFC Intelligence analyzed over seven years of historical Live Gamer micro-transaction data from multiple countries including South Korea, U.S., Japan, Germany, Vietnam and the Philippines.
The virtual item model has been a major driver of market growth in Asia, and has only recently been introduced to the mass market in Europe and North America, which was highly popularized through the growth of social networks. Recent games like Farmville from Zynga, Free Realms from Sony Online Entertainment and Combat Arms from Nexon have been able to attract millions of users while monetizing through virtual goods. According to the survey, 88 percent of respondents said they had purchased some form of digital content (including music, movies and games), while 60 percent of those responding indicated they had purchased an in-game good that was not a full game.
“In most cases, the digital items are offered in free-to-play (F2P) products, which are low risk for the consumer,” said DFC analyst David Cole. “By offering free play, these games can attract millions of users, many of which are now choosing to pay for virtual items to enhance the experience. In looking at the historical track record it is clear that a major advantage of a virtual item model is a single product can have a lifespan of years online as opposed to a few months on the retail shelf.”
Many of the products that use a virtual item model fall into a category DFC Intelligence calls MMOG Lite. MMOG Lite products often allow for persistent worlds and character building, but without the high monthly fees associated with large commercial massively multiplayer online games (MMOGs). In North America and Europe, DFC forecasts that the MMOG Lite market will grow from about $800 million in 2009 to over $3 billion by 2015.
“Korea still has the highest current revenue and longest history of all the markets we studied. However, when looking at seven years of actual historical transactional data, it is clear markets like Germany, Japan and the U.S. are not only trending towards Korea, but doing so at a significantly higher spend per transaction,” said Cole.
However, a virtual item model is not limited to any one game genre. “Music titles, shooters, sports games and pretty much any type of game will be able to benefit from growing consumer acceptance of digital items,” said DFC analyst Jeremy Miller. “Furthermore, the success of social networks like Facebook show the popularity of virtual items can extend far beyond games.”
“This study shows that core gamers are comfortable with the free-to-play model and are increasingly engaging in the purchase of virtual goods,” said Andrew Schneider, co-founder and president of Live Gamer, “The findings underscore the market potential as traditional Western game publishers migrate towards microtransactions as the central monetization method.”
Key findings from the new report were presented at VCON, a full-day event within the Game Developer Conference (GDC), held March 10 at Moscone Center in San Francisco.